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Business

Amgen in Advanced Talks to Buy Horizon Therapeutics

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Amgen Inc.

AMGN -2.42%

is in advanced talks to buy drug company

Horizon Therapeutics

HZNP 0.39%

PLC, according to people familiar with the matter, in a takeover likely to be valued at well over $20 billion and mark the largest healthcare merger of the year.

The U.S. biotechnology company was the last of three suitors standing in an auction for Horizon, the people said, after French drugmaker

Sanofi SA

said Sunday it was out of the running.

A deal could be finalized by Monday assuming the talks with Amgen don’t fall apart, the people said.

Horizon develops medicines to treat rare autoimmune and severe inflammatory diseases that are currently sold mostly in the U.S. Its biggest drug, Tepezza, is used to treat thyroid eye disease, an affliction characterized by progressive inflammation and damage to tissues around the eyes.

The company is Nasdaq-listed, but based in Ireland and has operations in Dublin, Deerfield, Ill., and a new facility in Rockville, Md.

Horizon said last month it was fielding takeover interest from Amgen, Sanofi and

Johnson & Johnson,

a disclosure prompted by a Wall Street Journal report.

Johnson & Johnson later said it had dropped out.

Last year, revenue from Tepezza more than doubled, driving Horizon’s overall net sales 47% higher to $3.23 billion. Horizon has said that annual global net sales of the drug are targeted to eventually peak at more than $4 billion as the company aims to win approval to sell it in Europe and Japan.

That type of growth is attractive to big drug companies—with many sitting on big piles of cash—that rely on acquisitions as a key strategy to expand sales. Many big drugmakers are looking for new sources of revenue to offset losses when some of their main products lose patent protection.

Analysts expect Amgen will lose sales when patents begin expiring on its big-selling osteoporosis drugs Prolia and Xgeva later this decade. The pair of drugs accounted for nearly $5.3 billion of Amgen’s $26 billion in revenue last year.

In October, Amgen completed a $3.7 billion deal for ChemoCentryx and its drug to treat a rare immune-system disease.

Adding Horizon would provide more rare immune-disease drugs to Amgen’s lineup, which also includes the biotech’s Enbrel and Otezla immune-disease therapies. Amgen could help sell more of Horizon’s products overseas, according to analysts.

Acquiring Horizon could add about $4 billion in new revenue for Amgen by 2024, according to Jefferies & Co.

Other big life-sciences companies have been inking deals in recent months.

Johnson & Johnson recently struck a $16.6 billion deal to acquire heart device maker Abiomed Inc. to bolster sales of its medical-gear division, which had been lagging behind those of its pharmaceutical unit.

Merck

& Co. followed with a deal of its own, agreeing to buy blood-cancer biotech

Imago BioSciences Inc.

for $1.35 billion, ahead of the patent expiration of its cancer immunotherapy Keytruda.

Pfizer Inc.,

meanwhile, agreed in August to buy Global Blood Therapeutics Inc. for $5.4 billion, in a deal that would give the big drugmaker a foothold in the treatment of sickle-cell disease.

A deal for Horizon would likely rank as the largest healthcare acquisition globally in 2022, ahead of the Johnson & Johnson-Abiomed tie-up. The selloff in stocks this year amid rising interest rates, while putting a damper on deal activity, has also made some companies more attractive targets. At the stock’s peak about a year ago, Horizon was valued at roughly $27 billion.

The shares, which fell sharply earlier this year, have surged since the possibility of a takeover surfaced, and the company now has a market value of about $22 billion.

Horizon’s other drugs include Krystexxa for treating gout, a form of inflammatory arthritis, and Ravicti for a rare, potentially life-threatening genetic disease known as urea cycle disorder that raises ammonia levels in the blood.

Drugs treating rare diseases have emerged as a large source of pharmaceutical sales because they can command high prices that health insurers have been willing to pay.

Write to Ben Dummett at ben.dummett@wsj.com, Dana Cimilluca at dana.cimilluca@wsj.com and Laura Cooper at laura.cooper@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

20 dividend stocks with high yields that have become more attractive right now

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Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

REIT prices may turn a corner in 2023

REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
SPX,
-0.50%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

Industry numbers

The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

Screen of high-yielding equity REITs

For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

For a broad screen of equity REITs, we began with the Russell 3000 Index
RUA,
-0.18%,
which represents 98% of U.S. companies by market capitalization.

We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

For example, if we look at Vornado Realty Trust
VNO,
+1.01%,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Brandywine Realty Trust BDN,
+1.82% 		11.52% 12.82% 1.30% $1,132 Offices
Sabra Health Care REIT Inc. SBRA,
+2.02% 		9.70% 12.04% 2.34% $2,857 Health care
Medical Properties Trust Inc. MPW,
+1.90% 		9.18% 11.46% 2.29% $7,559 Health care
SL Green Realty Corp. SLG,
+2.18% 		9.16% 10.43% 1.28% $2,619 Offices
Hudson Pacific Properties Inc. HPP,
+1.55% 		9.12% 12.69% 3.57% $1,546 Offices
Omega Healthcare Investors Inc. OHI,
+1.30% 		9.05% 10.13% 1.08% $6,936 Health care
Global Medical REIT Inc. GMRE,
+2.03% 		8.75% 10.59% 1.84% $629 Health care
Uniti Group Inc. UNIT,
+0.28% 		8.30% 25.00% 16.70% $1,715 Communications infrastructure
EPR Properties EPR,
+0.62% 		8.19% 12.24% 4.05% $3,023 Leisure properties
CTO Realty Growth Inc. CTO,
+1.58% 		7.51% 9.34% 1.83% $381 Retail
Highwoods Properties Inc. HIW,
+0.76% 		6.95% 8.82% 1.86% $3,025 Offices
National Health Investors Inc. NHI,
+1.90% 		6.75% 8.32% 1.57% $2,313 Senior housing
Douglas Emmett Inc. DEI,
+0.33% 		6.74% 10.30% 3.55% $2,920 Offices
Outfront Media Inc. OUT,
+0.70% 		6.68% 11.74% 5.06% $2,950 Billboards
Spirit Realty Capital Inc. SRC,
+0.72% 		6.62% 9.07% 2.45% $5,595 Retail
Broadstone Net Lease Inc. BNL,
-0.93% 		6.61% 8.70% 2.08% $2,879 Industial
Armada Hoffler Properties Inc. AHH,
-0.08% 		6.38% 7.78% 1.41% $807 Offices
Innovative Industrial Properties Inc. IIPR,
+1.09% 		6.24% 7.53% 1.29% $3,226 Health care
Simon Property Group Inc. SPG,
+0.95% 		6.22% 9.55% 3.33% $37,847 Retail
LTC Properties Inc. LTC,
+1.09% 		5.99% 7.60% 1.60% $1,541 Senior housing
Source: FactSet

Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

Largest REITs

Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Prologis Inc. PLD,
+1.29% 		2.84% 4.36% 1.52% $102,886 Warehouses and logistics
American Tower Corp. AMT,
+0.68% 		2.66% 4.82% 2.16% $99,593 Communications infrastructure
Equinix Inc. EQIX,
+0.62% 		1.87% 4.79% 2.91% $61,317 Data centers
Crown Castle Inc. CCI,
+1.03% 		4.55% 5.42% 0.86% $59,553 Wireless Infrastructure
Public Storage PSA,
+0.11% 		2.77% 5.35% 2.57% $50,680 Self-storage
Realty Income Corp. O,
+0.26% 		4.82% 6.46% 1.64% $38,720 Retail
Simon Property Group Inc. SPG,
+0.95% 		6.22% 9.55% 3.33% $37,847 Retail
VICI Properties Inc. VICI,
+0.41% 		4.69% 6.21% 1.52% $32,013 Leisure properties
SBA Communications Corp. Class A SBAC,
+0.59% 		0.97% 4.33% 3.36% $31,662 Communications infrastructure
Welltower Inc. WELL,
+2.37% 		3.66% 4.76% 1.10% $31,489 Health care
Digital Realty Trust Inc. DLR,
+0.69% 		4.54% 6.18% 1.64% $30,903 Data centers
Alexandria Real Estate Equities Inc. ARE,
+1.38% 		3.17% 4.87% 1.70% $24,451 Offices
AvalonBay Communities Inc. AVB,
+0.89% 		3.78% 5.69% 1.90% $23,513 Multifamily residential
Equity Residential EQR,
+1.10% 		4.02% 5.36% 1.34% $23,503 Multifamily residential
Extra Space Storage Inc. EXR,
+0.29% 		3.93% 5.83% 1.90% $20,430 Self-storage
Invitation Homes Inc. INVH,
+1.58% 		2.84% 5.12% 2.28% $18,948 Single-family residental
Mid-America Apartment Communities Inc. MAA,
+1.46% 		3.16% 5.18% 2.02% $18,260 Multifamily residential
Ventas Inc. VTR,
+1.63% 		4.07% 5.95% 1.88% $17,660 Senior housing
Sun Communities Inc. SUI,
+2.09% 		2.51% 4.81% 2.30% $17,346 Multifamily residential
Source: FactSet

Simon Property Group Inc.
SPG,
+0.95%
is the only REIT to make both lists.

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Business

China Weighs Zero-Covid Exit but Proceeds With Caution and Without Timeline

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SINGAPORE—Chinese leaders are considering steps toward reopening after nearly three years of tough pandemic restrictions but are proceeding slowly and have set no timeline, according to people familiar with the discussions.

Chinese officials have grown concerned about the costs of their zero-tolerance approach to smothering Covid outbreaks, which has resulted in lockdowns of cities and whole provinces, crushing business activity and confining hundreds of millions of people at home for weeks and sometimes months on end. But they are weighing those against the potential costs of reopening on public health and support for the Communist Party.

As a result, they are proceeding cautiously despite the deepening impact of the Covid policies, the people said, pointing to a long path to anything approaching pre-pandemic levels of activity, with the timeline stretching to sometime near the end of next year.

The uncertainty around China’s Covid-19 strategy has led to a guessing game in the financial markets, with some looking for any sign that China would begin easing its Covid policies. China’s Communist Party congress last month, when Chinese leader

Xi Jinping

claimed a third term, had once been viewed as a potential turning point in its battle against Covid, but little has changed in the country’s approach to containing Covid.

China’s leaders are worried that a surge in Covid infections, hospital admissions and deaths could undermine confidence in the ruling Communist Party’s legitimacy.



Photo:

TINGSHU WANG/REUTERS

On Saturday, officials from China’s National Health Commission again reaffirmed their commitment to a firm “zero-Covid” strategy, which they described as essential to “protect people’s lives.”

Some progress is being made on relaxing border controls for inbound travelers from abroad. Beijing is likely to further cut the number of hotel quarantine days required of incoming travelers by early next year, to a total of seven days, say people involved in discussions, from a current policy of seven days in a quarantine facility followed by three days of home monitoring.

Domestically, officials have informed retail businesses that the frequency of PCR testing—a staple of China’s Covid regime—could be reduced as soon as this month, in part because of the high cost of mass testing, according to people familiar with the matter. The people said the government is planning to reduce the thousands of PCR testing stations that have been set up across the country as part of the campaign to institutionalize testing, citing the cost.

ECONOMIC IMPACT OF COVID IN CHINA AND CHINA’S ZERO-TOLERANCE APPROACH

Still, the leadership has found it difficult to enact broader relaxation measures this year, the people said. Many of the measures will remain. The country will still move aggressively to stamp out even small outbreaks, through mass testing and lockdowns. People will still need to use health codes on their phones to access public spaces, and travelers entering the country will face quarantines and rounds of Covid tests.

A combination of new viral variants, an underequipped public healthcare system and the impending approach of winter has left Beijing worried that a potential surge in Covid infections, hospital admissions and deaths could undermine confidence in the ruling Communist Party’s legitimacy.

Chinese health officials have been closely monitoring the fatality rates and public reactions in Hong Kong, Japan and South Korea, which share cultural roots with China and where governments had until recently imposed similar measures, the people said.

“The reopening in China will be carried out in an orderly manner. It will start gradually depending on the geographic areas and sectors, and it will be different from what we’ve seen in the West,” said one of the people involved in discussions. For example, the government could decide to implement less stringent measures in cities that are major business hubs.

Workers at the world’s biggest assembly site for Apple’s iPhones walked out as Foxconn has struggled to contain a Covid-19 outbreak. The chaos highlights the tension between Beijing’s rigid pandemic controls and the urge to keep production on track. Photo: Hangpai Xinyang/Associated Press

While some have questioned the accuracy of China’s official figures, health experts say the country’s Covid fatality rate has been much lower than in much of the West due to its strict measures. Officially, China has recorded roughly 5,000 Covid-19 deaths, a fraction of the U.S.’s more than 1 million deaths. China’s Communist Party has celebrated its lower official death count as evidence of the superiority of its governance model.

In recent months, Chinese officials have maintained close contact with the World Health Organization, focusing on the alert level that the Geneva-based body has assigned for the Covid-19 pandemic, according to people familiar with the matter.

The WHO’s emergency committee meets once every three months to assess whether the pandemic still constitutes a “public health emergency of international concern.”

A WHO shift in declaration would give China more wiggle room for policy changes. Beijing could start to push for more aggressive easing measures and adjust the domestic narrative on Covid, effectively declaring victory in containing the virus, according to people familiar with the matter.

The WHO first declared a public health emergency of international concern in January 2020, and decided during its latest meeting, held in October, that it is still too early to lift the status. The next meeting is slated for January.

A WHO official said the agency doesn’t comment on private discussions with member states.

One plan under consideration in Beijing, the people said, would be to begin treating Covid-19 as a “Class B” infectious disease following any change in the WHO’s designation. China has been treating it as a Class A disease, which calls for stricter public-health measures.

Even with such a move, it could take China a much longer time—perhaps a year, the people said—to return to pre-pandemic levels of activity. The government wants to continue to monitor new variants closely to ensure that they don’t become more dangerous, they said.

Any further loosening of measures would be contingent on a boost in the elderly vaccination rate. Beijing is planning to launch a vaccination campaign later this year for vulnerable groups, aiming for 95% of people aged 60 or above to receive two doses, some of the people said. The latest government data, from early November, shows 86% of the elderly population had received two vaccine doses, compared with 90% for the broader population.

Another condition for a full reopening of its economy is to boost access to oral antivirals to treat Covid, the people said. Earlier this year, China’s drug regulator granted approval for Azvudine, an HIV drug developed by Chinese drugmaker Henan Genuine Biotech Co., to be used for treating Covid. Drug regulators have also approved

Pfizer Inc.’s

Paxlovid drug.

Any further loosening of measures would be contingent on a boost in the elderly vaccination rate.



Photo:

CHINA DAILY/VIA REUTERS

The National Health Commission responded to a request for comment by referring to remarks made during its Saturday press conference.

There have been some signs of a shift in China’s posture on Covid in recent months. In September, Mr. Xi visited Central Asia, making his first trip outside the country since Covid began spreading in the central Chinese city of Wuhan in early 2020. The Chinese leader has also begun receiving foreign heads of state in Beijing and is expected to attend a summit of leaders from the Group of 20 nations in Indonesia next week.

Still, Beijing has been careful to rein in expectations of a rapid shift, including in the Saturday press conference. In a string of pointed commentaries last month, Communist Party mouthpiece the People’s Daily called for confidence and patience with Beijing’s zero-Covid strategy. Health officials have urged local governments to build quarantine hospitals to prepare for rebounding infections. Shanghai, for example, is building a quarantine facility that can house more than 3,000 people at a cost of just under $200 million, state media reported.

“All the signs are pointing to the beginning of preparation for an eventual reopening, especially given the rising cost of the ‘dynamic zero-Covid’ policy for the economy,”

Goldman Sachs

economists said in a Monday note. “The actual reopening is still months away as elderly vaccination rates remain low and case fatality rates appear high among those unvaccinated based on Hong Kong official data.”

 —Drew Hinshaw contributed to this article.

Write to Keith Zhai at keith.zhai@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Health

Study finds Paxlovid can interact badly with some heart medications, and White House renews COVID emergency through Jan. 11

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A new study has found that the COVID antiviral Paxlovid can interact badly with certain heart medications, raising concerns for patients with cardiovascular risk who test positive.

The study was published in the Journal of the American College of Cardiology and found the reaction involved such medications as blood thinners and statins. As patients who are hospitalized with COVID are at elevated risk of heart problems, they are likely to be described Paxlovid, which was developed by Pfizer
PFE,
-0.28%.

 “Co-administration of NMVr (Paxlovid) with medications commonly used to manage cardiovascular conditions can potentially cause significant drug-drug interactions and may lead to severe adverse effects,” the authors wrote. “It is crucial to be aware of such interactions and take appropriate measures to avoid them.”

The news comes just days after the White House made a renewed push to encourage Americans above the age of 50 to take Paxlovid or use monoclonal antibodies if they test positive and are at risk of developing severe disease.

White House coordinator Dr. Ashish Jha told the New York Times that greater use of the medicine could reduce the average daily death count to about 50 a day from close to 400 currently.

“I think almost everybody benefits from Paxlovid,” Jha said. “For some people, the benefit is tiny. For others, the benefit is massive.” 

Yet a smaller share of 80-year-olds with COVID in the U.S. is taking it than 45-year-olds, Jha said, citing data said he has seen.

On Thursday, the White House extended its COVID pubic health emergency through Jan. 11 as it prepares for an expected rise in cases in the colder months, the Associated Press reported.

The public health emergency, first declared in January 2020 and renewed every 90 days since, has dramatically changed how health services are delivered.

The declaration enabled the emergency authorization of COVID vaccines, as well as free testing and treatments. It expanded Medicaid coverage to millions of people, many of whom will risk losing that coverage once the emergency ends. It temporarily opened up telehealth access for Medicare recipients, enabling doctors to collect the same rates for those visits and encouraging health networks to adopt telehealth technology.

Since the beginning of this year, Republicans have pressed the administration to end the public health emergency.

President Joe Biden, meanwhile, has urged Congress to provide billions more in aid to pay for vaccines and testing. Amid Republican opposition to that request, the federal government ceased sending free COVID tests in the mail last month, saying it had run out of funds for that effort.

Separately, the head of the World Health Organization urged countries to continue to surveil, monitor and track COVID and to ensure poorer countries get access to vaccines, diagnostics and treatments, reiterating that the pandemic is not yet over.

Tedros Adhanom Ghebreyesus said most countries no longer have measures in place to limit the spread of the virus, even though cases are rising again in places including Europe.

“Most countries have reduced surveillance drastically, while testing and sequencing rates are also much lower,” Tedros said in opening remarks at the IHR Emergency Committee on COVID-19 Pandemic on Thursday.

“This,” said the WHO leader, “is blinding us to the evolution of the virus and the impact of current and future variants.”

U.S. known cases of COVID are continuing to ease and now stand at their lowest level since late April, although the true tally is likely higher given how many people overall are testing at home, where the data are not being collected.

The daily average for new cases stood at 38,530 on Thursday, according to a New York Times tracker, down 19% from two weeks ago. Cases are rising in six states, namely Nevada, New Mexico, Kansas, Maine, Wisconsin and Vermont, and are flat in Wyoming. They are falling everywhere else.

The daily average for hospitalizations was down 7% at 26,665, while the daily average for deaths is down 7% to 377. 

The new bivalent vaccine might be the first step in developing annual Covid shots, which could follow a similar process to the one used to update flu vaccines every year. Here’s what that process looks like, and why applying it to Covid could be challenging. Illustration: Ryan Trefes

Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

Other COVID-19 news you should know about:

• Federal Health Minister Karl Lauterbach has urged German states to reintroduce face-mask requirements for indoor spaces due to high COVID cases numbers, the Local.de reported. Lauterbach was launching his ministry’s new COVID campaign on Friday. “The direction we are heading in is not a good one,” he said at a press conference in Berlin, adding it’s better to take smaller measures now than be forced into drastic ones later.

• Health officials in Washington and Oregon said Thursday that a fall and winter COVID surge is likely headed to the Pacific Northwest after months of relatively low case levels, the AP reported. King County (Wash.) Health Officer Dr. Jeff Duchin said during a news briefing that virus trends in Europe show a concerning picture of what the U.S. could soon see, the Seattle Times reported.

Two banners unfurled from a highway overpass in Beijing condemned Chinese President Xi Jinping and his strict Covid policies, in a rare display of defiance. The protest took place days before the expected extension of the leader’s tenure.

• Kevin Spacey’s trial on sexual-misconduct allegations will continue without a lawyer who tested positive for COVID on Thursday, Yahoo News reported. The “American Beauty” and “House of Cards” star is on trial in Manhattan federal court facing allegations in a $40 million civil lawsuit that he preyed upon actor Anthony Rapp in 1986 when Rapp was 14 and Spacey was 26. Jennifer Keller’s diagnosis comes after she spent about five hours cross-examining Rapp on the witness stand over two days — a few feet away from the jury box without wearing a mask.

• A man who presents himself as an Orthodox Christian monk and an attorney with whom he lived fraudulently obtained $3.5 million in federal pandemic relief funds for nonprofit religious organizations and related businesses they controlled, and spent some of it to fund a “lavish lifestyle,” federal prosecutors said Thursday. Brian Andrew Bushell, 47, and Tracey M.A. Stockton, 64, are charged with conspiracy to commit wire fraud and unlawful monetary transactions, the U.S. attorney’s office in Boston said in a statement, as reported by the AP.

Here’s what the numbers say:

The global tally of confirmed cases of COVID-19 topped 623.9 million on Monday, while the death toll rose above 6.56 million, according to data aggregated by Johns Hopkins University.

The U.S. leads the world with 96.9 million cases and 1,064,821 fatalities.

The Centers for Disease Control and Prevention’s tracker shows that 226.2 million people living in the U.S., equal to 68.1% of the total population, are fully vaccinated, meaning they have had their primary shots. Just 110.8 million have had a booster, equal to 49% of the vaccinated population, and 25.6 million of those who are eligible for a second booster have had one, equal to 39% of those who received a first booster.

Some 14.8 million people have had a shot of the new bivalent booster that targets the new omicron subvariants.

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Business

CVS Is in Advanced Talks to Buy Signify Health for Around $8 Billion

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CVS Health Corp.

CVS -0.49%

is in advanced talks to acquire the home-healthcare company

Signify Health Inc.

SGFY 1.34%

for around $8 billion, according to people familiar with the matter.

CVS appears to have beat out other heavy hitters including

Amazon.com Inc.

and

UnitedHealth Group Inc.,

which had been circling Signify for a deal that could be announced soon. UnitedHealth never submitted an official bid, one of the people said.

There is still no guarantee that CVS will reach a deal for Signify, which has been exploring strategic alternatives since earlier this summer.

Bids for the company were due Sept. 6, but people familiar with the matter have said that an eager buyer could make a move before then.

Signify’s valuation has ballooned since The Wall Street Journal reported in August that it was for sale. Shares of the company closed at $28.77 on Friday, giving it a market capitalization of roughly $6.7 billion.

Signify works with a large group of doctors to facilitate house calls. It uses analytics and technology to help physician groups, health plans, employers and health systems with in-home care. It offers health evaluations for Medicare Advantage and other plans.

At the close of its deal this year to buy Caravan Health, Signify said that it supported roughly $10 billion in total medical spending.

The company went public in February 2021, raising more than $500 million as a result of the offering. On the day of its initial public offering, shares of the company priced above its expected range, at $24.

New York-based New Mountain Capital has backed Signify since 2017. The firm—which had more than $37 billion in assets under management as of early August—has steadily expanded Signify through a series of mergers and acquisitions since its initial investment.

New Mountain is well-versed in the healthcare sector. It previously sold the healthcare payments firm Equian LLC to UnitedHealth for roughly $3.2 billion in 2019.

For CVS, the deal builds on an effort years in the making to transform itself into a major provider of healthcare services through acquisitions and expanded medical services. The company had been struggling to counter slowing revenue from prescription drugs, which drive the bulk of its sales, and to ward off competition from

Amazon

AMZN -0.24%

for retail dollars.

CVS, the nation’s largest drugstore chain by stores and revenue, acquired Aetna in 2018, arguing that melding the insurance company’s patient data with its network of nearly 10,000 bricks-and-mortar sites would squeeze out costs while improving care and convenience.

The strategy has paid off, buoyed by a surge in demand for Covid-19 vaccines and tests at the height of the pandemic. CVS’s market capitalization has grown to more than $130 billion from around $75 billion since the Aetna deal.

The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at each other’s share, often by borrowing ideas. Photos: Amazon/Walmart

The company is outperforming

Walgreens Boots Alliance Inc.,

which opted against major acquisitions, in the years since. Walgreens, also racing to expand into healthcare, focused largely on partnerships rather than deals. But last year it bought a controlling stake in the primary-care network Village MD, giving it doctors’ offices that CVS had said it could do without.

CVS Chief Executive

Karen Lynch

has since said that the company must have a foothold in primary care if it is to become a full-service medical provider.

CVS had previously been interested in a deal for the parent of One Medical, people familiar with the matter have said.

Amazon

AMZN -0.24%

agreed to purchase the primary-care clinic operator for about $3.9 billion in July.

The Federal Trade Commission is currently investigating the deal. The parent company of One Medical,

1Life Healthcare Inc.,

disclosed the investigation in a securities filing. The disclosure said One Medical and Amazon each received a request for additional information about the deal from the FTC.

While Wall Street has largely focused on CVS’s efforts to acquire primary-care practices, executives have also discussed ambitions to expand its in-home health presence.

A deal for Signify would represent a bright spot in an otherwise lackluster run for deals lately. Deal volumes globally are down roughly 30% this year after a flurry of activity last year, because of a drop in companies’ valuations, market volatility and other factors including Russia’s war in Ukraine.

Healthcare deal making in particular has slowed more than many other sectors. Over $200 billion of healthcare deals announced so far this year has compared with over $400 billion at this time last year, according to Dealogic. The largest healthcare deal to date this year in the U.S. is

Pfizer Inc.’s

$11.6 billion agreement in May to purchase the rest of

Biohaven Pharmaceutical Holding Co.

Write to Laura Cooper at laura.cooper@wsj.com, Sharon Terlep at sharon.terlep@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Pfizer says updated booster can provide more protection against omicron

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Pfizer says changing its COVID-19 vaccine to better target the omicron variant is safe and effective.

The update, in a statement issued Saturday, comes just days before regulators determine if Americans should receive another round of booster shots beginning this fall.

The most widely used vaccines currently in circulation mostly target the original, more dangerous but less viral, coronavirus strain. Their effectiveness against any infection dropped significantly, however, when the super-contagious omicron mutant emerged.

The Food and Drug Administration will consider this week if it should order a formula change for the vaccines made by both Pfizer
PFE,
+2.99%,
and its partner BioNTech
BNTX,
+1.32%,
as well as their rival Moderna
MRNA,
+0.71%,
in hopes that modified boosters could better protect against another COVID-19 surge expected this fall and winter. Other major countries are mulling the same shift.

Read: Sanofi, GSK say next-generation COVID-19 booster has 72% efficacy against omicron

“Based on these data, we believe we have two very strong omicron-adapted candidates that elicit a substantially higher immune response against omicron than we’ve seen to date,” said Pfizer CEO Albert Bourla.

The statement said the companies are ready to “rapidly adapt” the updated vaccines to target newer versions of the virus if needed.

Pfizer says it studied two different ways of updating their shots — targeting just omicron, or a combination booster that adds omicron protection to the original vaccine. The company and its partner also tested whether to keep the current recommended dosage of 30 micrograms or double its strength.

In a study of more than 1,200 middle-aged and older adults who’d already had three vaccine doses, Pfizer said both booster approaches showed a significant increase in omicron-fighting antibodies.

Several experts have said combination shots may be the best approach because they would retain the proven benefits of the original COVID-19 vaccine while adding new protection against omicron.

Pfizer said a month after people received its combo shot, they had a 9- to 11-fold increase in omicron-fighting antibodies. That’s more than 1.5 times better than another dose of the original vaccine, the Associated Press reported.

Moderna recently announced similar results from tests of its combination shot, or what scientists call a “bivalent” vaccine.

The Associated Press contributed.

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Health

New study finds omicron no less severe than earlier variants, and not just more transmissible

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A new study conducted by researchers at Harvard Medical School among others has found that the omicron variant of the coronavirus that causes COVID-19 is just as severe as earlier variants, and not more transmissible but no less severe, as previously thought.

The study was based on the records of 130,000 COVID patients in Massachusetts and carried out by researchers at Massachusetts General Hospital and Minerva University along with Harvard and is currently being peer-reviewed by Nature Portfolio, according to a Reuters report.

But its findings, which evaluated the severity of omicron after accounting for the effect of vaccines, underscores how important vaccines and boosters are, and shows they helped rein in hospitalizations and deaths during the omicron surge.

“Although the unadjusted rates of hospital admission and mortality appeared to be higher in previous waves compared to the Omicron period, after adjusting for confounders including various demographics, Charlson comorbidity index scores, and vaccination status (and holding the healthcare utilization constant), we found that the risks of hospitalization and mortality were nearly identical between periods,” the authors wrote.

“Our analysis suggests that the intrinsic severity of the Omicron variant may be as severe as previous variants.”

The study comes after a Washington Post analysis of Centers for Disease Control and Prevention data earlier this week found that omicron caused a spike in deaths in January and February among people who were vaccinated. Those deaths were mostly among elderly people and those with compromised immune systems and are thought to have had waning protection from vaccination.

See now: Omicron caused spike in deaths in vaccinated people, analysis finds, though unvaccinated remain most at risk

Experts agree that vaccination and boosters remain the best protection against severe disease and death and continue to urge unvaccinated people to get their shots. And there are concerns that the initial view that omicron caused only mild symptoms may have actually persuaded the vaccine hesitant that they didn’t need to be inoculated.

The study comes as cases continue to rise across the U.S. after their steep decline early in the year, driven by the BA.2 variant of omicron, and two subvariants that appear to be even more infectious. The two, named BA.2.12 and BA.2.12.1, were highlighted by health officials in New York state recently.

The U.S. is averaging 67,953 cases a day, up 59% from two weeks ago, according to a New York Times tracker. Cases are climbing in all but four states and territories and have more than doubled from two weeks ago in more than a dozen, the tracker shows.

The country is averaging 18,181 hospitalizations a day, up 20% from two weeks ago, but still relatively low. The daily death toll has fallen below 400 to 366 on average.

The World Health Organization said Thursday that new estimates show that the full death toll associated either directly or indirectly with the COVID-19 pandemic between Jan. 1, 2020, and Dec. 31, 2021, is about 15 million.

That number compares with the tally provided by Johns Hopkins University of 6.24 million.

Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

Other COVID-19 news you should know about:

• U.S. regulators on Thursday strictly limited who can receive Johnson & Johnson’s COVID-19 vaccine due to a rare but serious risk of blood clots, the Associated Press reported. The Food and Drug Administration said the shot should only be given to adults who cannot receive a different vaccine or specifically request the Janssen vaccine from J&J
JNJ,
-0.83%.
U.S. authorities for months have recommended that Americans starting their COVID-19 vaccinations use the Pfizer
PFE,
+0.98%
 or Moderna
MRNA,
-5.89%
 shots instead. FDA’s vaccine chief, Dr. Peter Marks, said the agency decided to restrict the vaccine after taking another look at the data on the risks of life-threatening blood clots and concluding that they are limited to J&J’s vaccine.

• North Carolina state employees will get an extra day of vacation for receiving a COVID-19 booster, Gov. Roy Cooper announced as the state government there uses a new incentive to increase vaccination rates, the AP reported separately. Cooper signed an executive order that provides the leave to permanent, probationary or time-limited workers whose cabinet-level agencies report to him. The extra time off will be given to those who have already received the first COVID-19 booster or those who show documentation by Aug. 31 of receiving one.

Beijing is racing to test more than 20 million people as residents scramble to stock up on food. WSJ’s Jonathan Cheng shows what life is like in the capital and unpacks the likely ripple effects if officials can’t control the fast-spreading virus. Photo: Kevin Frayer/Getty Images

• The number of unruly air-passenger incidents in the U.S. has fallen since a federal judge in Florida overturned the federal mandate, the New York Times reported, citing data from the Federal Aviation Administration. The agency reported 1.9 incidents per 10,000 flights during the week ending April 24, down from 4.4 incidents per 10,000 flights a week earlier. It declined to cite a reason for the drop. The CDC continues to recommend that people wear face masks on public transport and in public-transport hubs, especially as subvariants of omicron continue to circulate.

• China’s elderly population’s reluctance to get vaccinated is challenging the country’s zero-COVID strategy, the Washington Post reported. Unlike most of China’s coronavirus prevention measures, vaccination is not mandatory, and low uptake among the country’s most vulnerable groups is a major reason Communist Party leaders feel compelled to persist with a grueling “zero-COVID” approach. That has led to a strict lockdown in Shanghai that is now being eased. Chinese President Xi Jinping said relaxation of the strategy now would lead to “massive numbers of infections” and deaths.

Here’s what the numbers say

The global tally of confirmed cases of COVID-19 topped 516.2 million on Wednesday, while the death toll rose above 6.24 million, according to data aggregated by Johns Hopkins University.

The U.S. leads the world with 81.7 million cases and 996,996 fatalities.

The Centers for Disease Control and Prevention’s tracker shows that 219.9 million people living in the U.S. are fully vaccinated, equal to 66.3% of the total population. But just 101 million are boosted, equal to 45.9% of the vaccinated population.

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Health

Omicron caused spike in deaths in vaccinated people, analysis finds, though unvaccinated remain most at risk

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The omicron variant of the coronavirus that causes COVID-19 that has swept across the U.S. since late last year has taken a grimmer toll than earlier variants, including in people who were vaccinated and even had booster shots.

That’s according to a Washington Post analysis of data from the Centers for Disease Control and Prevention, which found that 42% of COVID fatalities in January and February were of vaccinated people, compared with 23% of the dead in September, when the delta variant was still dominant.

The data are based on the date of infection and limited to a sampling of cases in which vaccination status was known, the paper reported. The deaths were mostly in elderly people and people with compromised immune systems. Almost two-thirds of those people who died during omicron were 75 and older.

Omicron, and its growing number of subvariants, has proved to be far more infectious than earlier strains. The rise in fatalities is thought to be linked to vaccine protection waning over time, making it harder for those patients who are most at risk to avoid contracting the disease.

The data also show that unvaccinated people remain at far higher risk than the vaccinated, and are far more likely to die if they do become ill, and they are at more risk than people who have had their booster shot.

“It’s still absolutely more dangerous to be unvaccinated than vaccinated,” Andrew Noymer, a public health professor at the University of California at Irvine who studies COVID-19 mortality, told the newspaper.

“A pandemic of — and by — the unvaccinated is not correct. People still need to take care in terms of prevention and action if they became symptomatic.”

COVID cases are still rising across the U.S. after their steep decline early in the year. The U.S. is averaging 60,953 cases a day, according to a New York Times tracker, up 55% from two weeks ago. The country is averaging 17,220 hospitalizations a day, up 16% from two weeks ago, but still close to the lowest level since the first weeks of the pandemic. The average daily death toll has fallen below 400 to 331.

In a sign of how the trend has changed, New York City on Monday raised its COVID risk level to medium from low. The city is averaging 2,654 cases a day, compared with about 600 a day in early March. The number may be even higher as many people are now testing at home and the data are not all being collected. 

See now: South Africa hit by new subvariants of omicron that have been detected in the U.S. in small numbers

Vice President Kamala Harris will return to work in person on Tuesday after testing negative for COVID-19, her press secretary said in a statement.

“Today, the Vice President tested negative for COVID-19 on a rapid antigen test,” said press secretary Kirsten Allen in a statement. “Following CDC guidelines, she will wear a well-fitting mask while around others through the ten-day period.”

Harris tested positive for COVID on April 26, and Allen said at the time that the vice president would return to work at the White House once she had tested negative for the virus.

Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

Other COVID-19 news you should know about:

• Beijing is preparing new hospital facilities to deal with a spike in COVID-19 cases, even though the numbers of new cases remain low, the Associated Press reported. State media reported Tuesday a 1,000-bed hospital at Xiaotangshan in the northeastern suburbs built for the 2003 SARS outbreak has been refurbished in case it’s needed. Unofficial reports online say thousands of beds have been prepared in a centralized quarantine center near the airport, but state media have not confirmed those preparations in what could be an attempt to avoid stoking public fears.

Beijing is racing to test more than 20 million people as residents scramble to stock up on food. WSJ’s Jonathan Cheng shows what life is like in the capital and unpacks the likely ripple effects if officials can’t control the fast-spreading virus. Photo: Kevin Frayer/Getty Images

• Shanghai is easing some of its COVID restrictions as cases fall and the city loosens a draconian lockdown that’s now in its second month, Barron’s reported. Nearly 2,000 companies in China’s financial capital have been given the green light to restart work — albeit under restrictive conditions, such as requiring workers to live at factories and undergo weekly if not daily nucleic acid testing.

• Pfizer
PFE,
+1.97%
posted stronger-than-expected earnings for the first quarter Tuesday, boosted by sales of its COVID vaccine and antiviral. COVID vaccine revenue grew to $13.2 billion from $3.2 billion, while sales of its antiviral Paxlovid rose to $1.5 billion. The company said it expects COVID vaccine sales of about $32 billion in 2022 and antiviral sales of about $22 billion.

• Wedbush analyst Dan Ives cut his rating on e-signature stock DocuSign
DOCU,
-2.20%
to underperform from neutral, citing a more challenging landscape for a company that was a big winner early in the pandemic. “[W]e believe the company is seeing a much more difficult selling environment as the company expands into broader CLM [contract-lifecycle-management] deals with e-signature going through a major growth transition in the field,” Ives wrote. The stock was last down 2.8%.

Here’s what the numbers say

The global tally of confirmed cases of COVID-19 topped 514.3 million on Friday, while the death toll rose above 6.23 million, according to data aggregated by Johns Hopkins University.

The U.S. leads the world with 81.4 million cases and 994,013 fatalities.

The Centers for Disease Control and Prevention’s tracker shows that 219.8 million people living in the U.S. are fully vaccinated, equal to 66.2% of the total population. But just 100.7 million are boosted, equal to 45.8% of the vaccinated population.

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Health

CDC study highlights speed with which omicron variant infected Americans, and WHO warns testing is still crucial

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A report from the Centers for Disease Control and Prevention is highlighting just how many Americans have been infected with COVID-19, and how significantly the number has increased since the arrival of the highly infectious omicron variant late last year.

The report published on Tuesday found case numbers were particularly striking in children, with three out of every four being infected, sending the total to 75% in February from about 45% in December, as the Associated Press reported. 

Among Americans of all ages, roughly 34% had signs of prior infection in December, rising to 58% in February.

The researchers examined blood samples from more than 200,000 Americans and looked for virus-fighting antibodies arising from infections, not vaccines.

“I did expect it to increase. I did not expect it to increase quite this much,” said Dr. Kristie Clarke, co-leader of a CDC team that tracks the extent of coronavirus infections.

The older people were, the less likely they had evidence of past infections, the study found. For those 65 and older, 19% had signs of prior infection in December and 33% did in February. That may be because older adults have higher vaccination rates and they may be more likely to take other COVID-19 precautions, such as wearing masks and avoiding crowds, Clarke said.

CDC officials stressed that the previously infected should still get COVID-19 vaccines, as they remain the best protection against severe disease and death. 

Since the start of the Covid-19 pandemic in 2020, the scientific understanding of its transmission and prevention has evolved. WSJ’s Daniela Hernandez explains what strategies have worked for stemming the spread of the virus and which are outdated in 2022. Illustration: Adele Morgan

COVID-19 cases are rising again in the U.S., driven by the BA.2 variant of omicron, along with two subvariants that appear to be even more infectious. The two, named BA.2.12 and BA.2.12.1, were highlighted by health officials in New York state recently.

The U.S. is averaging 50,791 cases a day, according to a New York Times tracker, up 61% from two weeks ago. Cases are rising in almost all states and territories, in some cases more than doubling since the start of April.

The country is averaging 15,908 hospitalizations a day, up 6% from two weeks ago, although still close to the lowest since the first weeks of the pandemic. The daily death toll has fallen below 400 to 362 on average. 

But the official death toll is expected to reach 1 million within weeks, and experts are warning that with many other parts of the world still unvaccinated, new variants may emerge.

See now: Many Americans feel the pandemic is over, but new, highly transmissible and immune-evasive variants are likely, says White House COVID response coordinator

Vice President Kamala Harris tested positive Tuesday for COVID-19 on rapid and PCR tests, said her press secretary, Kirsten Allen, in a statement.

Harris “has exhibited no symptoms, will isolate and continue to work from the vice president’s residence. She has not been a close contact to the president or first lady due to their respective recent travel schedules,” Allen added.

Meanwhile, Pfizer
PFE,
+1.45%
and German partner BioNTech
BNTX,
-2.37%
have asked the Food and Drug Administration to authorize a COVID-19 booster dose for children between the ages of 5 and 11. Boosters are authorized for teens and adults.

The companies said data from a Phase 2/3 clinical trial yielded no new safety concerns when children in this age group received a booster six months after completing the primary series of shots.

Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

Other COVID-19 news you should know about:

• Shanghai city authorities said Wednesday they will start rounds of COVID-19 testing over the next few days to determine which neighborhoods can safely be allowed a limited amount of freedom of movement, the AP reported. Residents in Beijing are watching carefully for word on whether the capital city will lock down. China reported 14,222 new cases, the most of which were asymptomatic. The country is battling its largest outbreak since the first outbreak was reported in Wuhan in late December 2019. The flow of industrial goods has also been disrupted by the suspension of access to Shanghai, home of the world’s busiest port, and other industrial cities including Changchun and Jilin in northeast China. That phenomenon is showing up frequently in U.S. corporate earnings during the current first-quarter season.

Beijing is racing to test more than 20 million people as residents scramble to stock up on food. WSJ’s Jonathan Cheng shows what life is like in the capital and unpacks the likely ripple effects if officials can’t control the fast-spreading virus. Photo: Kevin Frayer/Getty Images

• The European Union is moving out of the emergency phase of the pandemic in which testing should be targeted and monitoring of COVID-19 cases should be similar to sample-based flu surveillance, Reuters reported. The shift comes amid a steady decline in cases and deaths and with more than 70% of the trading bloc’s population vaccinated and boosted.

• The EU’s move comes as the World Health Organization is warning that a steep decline in testing around the world is leaving it blind to the virus’s continuing spread and to potentially dangerous mutations, the Guardian reported. WHO chief Tedros Adhanom Ghebreyesus told reporters that while falling case numbers and fatalities are a welcome trend, they could also be the result of significant cuts in testing. “As many countries reduce testing, WHO is receiving less and less information about transmission and sequencing,” he said. “This makes us increasingly blind to patterns of transmission and evolution. When it comes to a deadly virus, ignorance is not bliss.”

• Gilead Sciences Inc.
GILD,
-0.29%
has steadily expanded the use of its COVID treatment Veklury while much of the nation’s attention has shifted to the arrival of new antivirals that can be picked up at a pharmacy counter, MarketWatch’s Jaimy Lee reported Wednesday. So far this year, the Food and Drug Administration granted approval to Veklury as an outpatient treatment for COVID-19 patients who are at high risk of hospitalization or death; the regulator upgraded the authorization to full approval for use in young children; and the World Health Organization revised its conditional recommendation for Veklury, saying it now recommends treatment for patients with mild or moderate COVID-19 who are at high risk of hospitalization. Gilead first received emergency authorization for remdesivir, as it was then called, as a treatment for hospitalized COVID-19 patients on May 1, 2020, making it the first new drug to demonstrate it helped hospitalized COVID-19 patients during one of the darkest points in the pandemic. The company will report first-quarter earnings on Thursday.

As fourth doses of Covid vaccines roll out, some are questioning whether the general population needs them. At the center of this debate are mysterious T-cells. WSJ’s Daniela Hernandez explains T-cells’ role in Covid immunity and how they relate to antibodies. Illustration: Adele Morgan

Here’s what the numbers say

The global tally of confirmed cases of COVID-19 topped 511.3 million on Tuesday, while the death toll rose above 6.22 million, according to data aggregated by Johns Hopkins University.

The U.S. leads the world with 81.1 million cases and more than 992,028 fatalities.

The Centers for Disease Control and Prevention’s tracker shows that 219.4 million people living in the U.S. are fully vaccinated, equal to 66.1% of the total population. But just 100.2 million are boosted, equal to 45.7% of the vaccinated population.

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Business

As Fed signals a 25-basis point hike later this month, here’s what that means for your credit-card bill, savings and mortgage repayments

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Federal Reserve Chair Jerome Powell is telegraphing his first punch in the fight against inflation — his intention to support a 25 basis-point increase on a benchmark interest rate, the first in a number of potential rate hikes this year.

Now it’s time for consumers to make their own maneuvers, particularly those who are planning to pay down credit-card debt or build up their savings in 2022.

By itself, a quarter-percentage-point increase will not make a big difference to a credit card’s annual percentage rate (APR) or their savings account’s annual percentage yield (APY), experts say. But stack several rate increases together and consumers will start to feel the pinch, they note.

In Congressional testimony Wednesday and Thursday, Powell previewed what’s he’s considering at a crucial policy meeting scheduled for mid-March. That way, markets do not have to wait in the lurch when there’s already so much uncertainty — due to Russia’s invasion of Ukraine — and they aren’t blindsided when the increase happens to the federal funds rate now near zero.

“I do think it will be appropriate to raise our target range for the federal funds rate at the March meeting in a couple of weeks. And I’m inclined to propose and support a 25-basis-point rate hike,” he told lawmakers Wednesday.

On Thursday, he reiterated plans for a 25-basis-point increase and said he supports a “series” of 2022 hikes. If price inflation rates stay high, the Fed would be ready with rate hikes exceeding a quarter percentage point, Powell said.

Markets liked the certainty, and it’s a helpful heads up for consumers because the federal funds rate strongly influences a credit card’s APR and a savings account’s APY. Here’s more on that relationship:

Added credit-card costs

If a rate hike does comes this month, it could be April or May when credit-card holders see the higher APR reflected on their bill, said Matt Schulz, chief credit analyst at LendingTree. For anyone with credit-card debt, “any rise in rates is unwelcome, but the truth is that the Fed’s move in March isn’t likely to rock most people’s financial world, if it is only a quarter-point increase. The danger comes if the rate increases keep coming — and in bigger chunks.”

Consider this scenario:

A person carries a balance of $5,000 and makes $250 monthly payments, with a 16.44% APR (the average credit card interest rate in 2021’s fourth quarter, according to the Fed). To pay off the balance, the person will pay $884 in interest, Schulz said.

In comes a 25-point basis point increase:

That would bring the APR to a potential 16.69% because the prime rate — which issuers use to make their credit-card rates — historically absorbs the full amount of the federal funds rate increase, Schulz said. Now the same person is paying $900 in interest to pay down the balance, a $16 increase over the life of the loan, he said.

And another 25-basis-point increase:

With an APR of 16.94%, that turns into $917 in interest, an additional $32 during the loan’s duration.

If there are six, quarter-percent rate increases — which isn’t out of the ballpark when some observers say there could be seven hikes — that turns into a 1.5% rise for APR, Schulz said. Now the borrower has to pay $985 in interest, he said. That’s $101 extra during the life of the loan.

In a time of high inflation, an extra $101 being paid to interest instead of groceries or gas will be a tough reality for families living paycheck to paycheck. Average hourly earnings were flat from January to February, but up 5.1% year-over-year according to Friday’s jobs report.

Americans had approximately $860 billion in credit-card debt during 2021’s fourth quarter, according to the Federal Reserve Bank of New York. Borrowers had an average $4,857 in credit-card debt during the third quarter, according to TransUnion
TRU,
+2.13%,
one of the big three credit bureaus.

It’s worth noting that some rates will be higher depending on a cardholder’s credit history. In February, the average rate for all new card offers was 19.53%, according to LendingTree.

Higher savings-account yields

“The good news about interest-rate hikes is that consumers who put their money in high-yield savings accounts will grow their money faster so continuing to shore up savings this year will yield more returns than last year,” said Gannesh Bharadhwaj, general manager of credit cards at Credit Karma
INTU,
-1.64%.

Savings accounts are a place to safely store easy-to-access cash, rather than to reap large returns. Extra interest yields after a rate hike will be modest at first but can pile up depending on how many rate increases occur, said Ken Tumin, founder and editor of DepositAccounts.com.

Right now, an online savings account has an average 0.49% APY, he said. Historically, rate increases haven’t all been passed along to the APY, at least at first, Tumin said.

A 25 basis point hike could mean a potential average APY around 0.55% – 0.6%, he estimated. If a savings account has $10,000, that little step up bears an extra $10, Tumin said.

But the talk is of multiple rate increases. If there are six, quarter-percentage-point increases, that same $10,000 account could produce an extra $100 in a year, he estimated.

Online savings accounts are the places to find the elevated APYs, not the “brick and mortar” banks, Tumin said.

During the previous rate-hike cycle from 2015 to 2018, there were three, quarter-point increases “before the average high-yield savings account APY had any significant gain,” he noted. “The rise may be faster this time due to high-yield savings account rates that have fallen to levels much lower than the bottom levels before 2015.”

‘A marginal impact’ for mortgage rates

“For housing, the Fed’s short-term rate has a marginal impact on mortgage rates,” said George Ratiu, senior economist and manager, economic research at Realtor.com.

There’s a different Fed action connected to those rates, he said. Along with dropping the federal funds rate during the pandemic’s early days, the central bank also bought up Treasury debt and agency mortgage-backed securities. The central bank has decided it’s a good time to end that.

From 2020 to 2021, those Fed purchases injected liquidity and sent mortgage rates to the basement, Ratiu said. “As the Fed announced it planned to finalize its tapering of [mortgage-backed securities] purchases later this month, we have seen rates surge to highs not seen since mid-2019.”

So prospective homeowners are already paying for Fed actions. The average 30-year fixed mortgage rate hit 3.76% this week, Freddie Mac
FMCC,
-1.41%
said. To put that in context, the 30-year fixed mortgage rate was closer to 2.7% a year ago.

One basis point is equal to one-hundredth of a percentage point. It’s major shift from just a few weeks earlier when the average rate for the 30-year loan jumped to the highest level since May 2019, close to 4%.

February’s median listing came to $392,000, according to Realtor.com. Compared to a year ago, a buyer would pay $278 more on their monthly mortgage, Ratiu noted. That’s more than $3,300 added to the buyer’s yearly financial burden.

“Additional increases in mortgage rates will further squeeze buyers’ budgets and may limit first-time buyers’ ability to qualify for a mortgage, especially with prices continuing to advance,” he said.

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